China gives visa green light to prepare local bank card clearing business

The People’s Bank of China has approved Visa to prepare a locally registered bank card clearing organisation, handing the US card payment giant a long-awaited breakthrough in one of the world’s largest card markets.

In an online statement on Tuesday, the central bank said Visa would have one year to complete its advance arrangements, after which it may submit an application to begin operations. The PBOC described the decision as a major step in China’s financial opening up.

The approval does not yet allow Visa to clear domestic RMB card transactions. It permits the company to establish a local entity and carry out preparatory work, with final operating permission subject to a further application.

China’s bank card clearing market has long been dominated by state-backed China UnionPay. Foreign card networks were effectively excluded from domestic RMB clearing until Beijing began opening the sector. The process gained momentum after a 2012 World Trade Organization ruling and 2015 State Council rules allowed qualified domestic and foreign firms to apply.

American Express became the first foreign network to win final approval to clear bank cards in China in 2020, through a joint venture. Mastercard later received approval in 2023 to begin domestic bank card clearing. Visa, which has sought direct access for years, had been waiting for its own green light.

A local Visa clearing entity would allow Chinese banks to issue Visa-branded cards for domestic RMB transactions, giving Visa direct access to a vast market. It could also introduce more competition in a sector where UnionPay has been the sole domestic clearing network, potentially putting pressure on fees and accelerating payment innovation.

For consumers, analysts say, greater competition could mean more choices and better acceptance, though the practical impact will depend on how quickly Visa completes its preparations and secures final approval.

Visa still faces a two-step process. The PBOC approval covers only preparation; the company must finish its local setup within a year before applying to begin operations. The central bank’s statement did not specify when Visa might start clearing transactions or what conditions regulators could attach.

The decision underscores Beijing’s balancing act: opening parts of its financial system to foreign firms while maintaining close regulatory oversight of payment infrastructure and data. If Visa clears the final hurdle, China’s bank card market will move closer to the multi-network landscape common in other major economies.